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First Look - US and Canadian refinery maintenance to lag previous years

Oil is trading higher following yesterday's interest rate cut
- The Federal Reserve cut rates by 50 bps yesterday in the first reduction of the Federal Funds Rate in several years
- Lower interest rates should support crude consumption while also weakening the US dollar, which would also be supportive of oil prices
US and Canadian refinery maintenance lags prior years (Argus)
- US and Canadian fall refinery maintenance is lighter than in previous years, with turnarounds at refineries totaling up to 1.8 MMBbl/d starting this quarter and 2.6 MMBbl/d of capacity scheduled for the second half of the year
- BP's 435 MBbl/d Whiting, Indiana, refinery and Cenovus' 183 MBbl/d Lima, Ohio, refinery begin turnarounds this month
- US refinery utilization is expected to decline to an average of 91% in Q3 and 88% in Q4, according to EIA
- Lower refinery maintenance should result in less bearish pressure on oil prices

Natural gas prices are trading lower, extending losses from yesterday
- Temperatures will continue to fall over the next several weeks but remain near the 10-year normal, which should depress demand for gas-fired power as we head into the shoulder season
- Gulf of Mexico volumes have mostly returned to normal, with production receipts showing output at 1.7 Bcf/d
- Cove Point LNG is expected to begin its annual maintenance tomorrow, which should last for about a month and could depress Northeast cash prices
AI proliferation to depend on Permian Basin gas, says Chevron (S&P)
- AI proliferation is increasingly reliant on Permian Basin natural gas for its significant electricity needs, according to Chevron's CEO
- Total US Lower 48 peak electricity demand could rise to 870 GW by 2030, driven by data center
- Global AI growth presents new export opportunities for LNG companies
- However, it is important to note that renewables will continue to be built out and could steal a large amount of the incoming power demand from gas-fired generators